McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. 6 Chapter Decision Making Decision Making McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives After reading this chapter, you should be able to: z Know how to implement the six stages of management decision making. z Apply the criteria of quality and acceptance to a decision. z Recognize the characteristics of management decisions: programmability, uncertainty, risk, conflict, and decision scope. z Reap the advantages and avoid the disadvantages of group decision making. z Develop the skill of time management to allow adequate time to make decisions. z Know when to delegate, and do so wisely. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Introduction z Making decisions under conditions of risk and uncertainty is one of the most important activities that managers engage in. z Generally, there is a lack of information and a limited amount of time available to make the decision. z Procrastinating and not making a decision sometimes has greater risk than making it. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Decision Making z The process of identifying problems and opportunities and resolving them. z Management decisions can be made by managers, teams, or individual employees, depending on: ¾ The scope of the decision, and ¾ The design and structure of the organization. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Characteristics of Management Decision Making Programmability Programmability U ncertainty U ncertainty Risk Risk C onflict C onflict D ecision Scope D ecision Scope Crisis McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Characteristics of Management Decision Making (Cont) Programmed Decisions Programmability Non-programmed Decisions Certainty Uncertainty Uncertainty McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Characteristics of Management Decision Making (Cont) z Risk – occurs when the outcome of management decision is uncertain ¾ Risk has both positive and negative aspects ¾ Decision environment for risk vary depending upon company culture and size z Conflict – occurs when there are opposing goals, scares resources, or differences in priorities z Crisis – a situation that involves small amounts of time to make a decision that can impact the survival of the organization McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. z Decision Scope – the effect and time horizon of a decision z Strategic Decisions – long term perspective of 2-5 years and affect on the organization z Tactical Decisions – short term perspective of 1 year or less and focus on subunits z Operational Decisions – shortest time perspective, generally less than a year, often measured on a daily or weekly basis Characteristics of Management Decision Making (Cont) McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.© 2004 The McGraw-Hill Companies, Inc. All rights reserved. Stages of Decision Making Identifying Identifying and and diagnosing diagnosing the problem the problem Generating Generating alternative alternative solutions solutions Evaluating Evaluating alternatives alternatives Selecting Selecting the best the best alternative alternative Implementing Implementing the decision the decision Evaluating Evaluating the decision the decision McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. [...]... of energy and alertness Set deadlines McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Effective Time Management Practices (continued) Answer phone messages and e-mail in batches during a lull in your work schedule Have a place to work uninterrupted Do something productive during non-productive activities McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Effective... economic payoff McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Factors That Limit Rational Decision Making O rgani i Poltcs zaton ii Em otons and Personal i Pref erences Il on ofC ont lusi rol McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Nonrational Decision Making Models Satisficing Model Bounded rationality – the ability of a manager to be perfectly... Group decision McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Decision Making Techniques to Stimulate Group Creativity B rai orm i nst ng D el phi Techni que McGraw-Hill St oryboardi ng N om i G roup nal Techni que ( G T) N © 2004 The McGraw-Hill Companies, Inc All rights reserved Skills for decision making process Time management skills To make good decisions, managers need time... successful with implementation McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Assumptions of the Rational Decision Making Process The problem is clear and unambiguous There is a single, well-defined goal that all parties agree to Full information is available about criteria All the alternatives and their consequences are known McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights... perspectives Greater comprehension Training ground McGraw-Hill Disadvantages Social pressure Minority domination Logrolling Goal displacement “Groupthink” © 2004 The McGraw-Hill Companies, Inc All rights reserved Managing Group Decision Making Leadershi St e p yl D evi’ A dvocat R ol ls e e Stm ul i C reatviy i atng i t McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Leader Decision... increase the productivity of the workforce McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Evaluating Alternatives Decision criteria should be related to the performance goals of the organization and its subunits Decision criteria can include: Costs Profits Timeliness Whether the decision will work Fairness McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Evaluating... of decision making based on people’s feelings McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Approaches to selecting the best alternative Optimizing – selecting the best alternative from among multiple criteria Satisficing – selecting the first alternative solution that meets a minimum criterion McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Key factors... appreciation McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Applications of Management Perspectives—For the Manager Procrastination is a major barrier to effective decision making Managers need to establish clear priorities by: Determining which activities produce the greatest value Setting dates for completion of these activities Setting priorities forces managers to make decisions and... McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Effective Delegation (continued) Keep communication channels open Allow employees to do the task the way they feel comfortable doing it Trust employees’ capabilities Check on the progress of the assignment Hold the employee responsible for the work Recognize what the employee has done, and show appropriate appreciation McGraw-Hill... make good decisions, managers need time to understand the problem and develop creative solutions Delegation skills Managers who know how to delegate are able to accomplish more than those who feel the need to be involved in every decision, no matter how trivial McGraw-Hill © 2004 The McGraw-Hill Companies, Inc All rights reserved Effective Time Management Practices Plan a list of things that need to . McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. 6 Chapter Decision Making Decision Making McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights. wisely. McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. Introduction z Making decisions under conditions of risk and uncertainty is one of the most important activities that managers. be made by managers, teams, or individual employees, depending on: ¾ The scope of the decision, and ¾ The design and structure of the organization. McGraw-Hill © 2004 The McGraw-Hill Companies,